Investing in Africa: How to Do it Right

There are two ways that Africa presents itself to the world. There is the untapped growth model, where the region is positioned as a future global economic powerhouse; and the troubled, post-colonial legacy profile, of a “dark continent” mired in poverty, corruption and the toxic mix of ethnic and religious rivalries that perpetuate civil conflicts—a civilization at war with itself. In healthcare, statistics on public health show Africa posting major gains against infant mortality and life expectancy.

But this is balanced by a huge demographic challenge—Africa is literally running out of space for its people—along with poor infrastructure and a woefully disconnected network of trading relationships.

Another imbalance is that between the desire of major equity investors to find investment targets of a suitable size, quality and depth and the impact of deprecating local currencies and slower economic growth.

The latter tends to deflate such opportunities and push investors to smaller projects with lower returns and much longer time-frames to cash out.